Thursday, January 3, 2008

Lucy Bernholz is on the board of GiveWell, subject to a recent firestorm (or maybe a small birthday candlestorm), and has asked for some advice. Never one to shrink away from offering free advice,

As I watched this all unfold, I kept thinking that it is so appropriate to the organization-- openness means you get to see both the good and the bad. And more irritatingly for the board and staff, everyone gets to comment on it.

I also kept thinking about how far worse happens, but would never make it to the light of day in traditional organizations.

So how does one decide between the options you present? I suggest a few criteria:

The magnitude of the offense. It is easy to imagine yourself a saint on the net and hold people to your saintly expectations. How bad is the offense?

The quality of the idea. People tend to join start up boards because they believe in the idea behind the organization or the founder or better yet, both. So is the belief in the idea strong enough to wade in there when you no longer have confidence in the person?

Rehabilitation. Some of us believe in locking up the criminals and throwing away the key. Others believe in rehabilitation. Seems like your own beliefs are a pretty big driver. The other angle of this is whether you believe the staff in question can be rehabilitated.

Personal energy. Do you have the energy to clean up the mess?

The rest of the board. No matter what decision you personally make, if you are the only one for rehabilitation or shutting the place down, then there is not much chance of a positive outcome.

That a guy in his mid-twenties got a little rambunctious after seeing his picture in the New York Times and started to believe his the whole "quit a hedge fund" marketing storyline is not a very big deal to me personally. So for me the magnitude of the offense is small. [Edit: This is not a defense of what was done or a suggestion that it is any way acceptable. I am a big believer there needs to be clear consequences for dishonest actions.]

The quality of the idea is extraordinary, IMHO. No one has done openness and transparency well or modeled it for others. You guys are doing a great job. Unfortunately, you are doing such a good job we get to see the bad as well.

I'm a big believer in rehabilitation. The antics really have me believing the whole ex-hedge fund storyline (I have a low opinion of the ethics of most big money players). But I don't know the man, so I'm not sure of the rehab-ability. But from what I've seen from afar, I would rehabilitate and brace myself for the next 1 or 2 of these and then watch some really extraordinary accomplishments roll out. Too often in the nonprofit sector, IMHO, we discount the high driven, high-performance, outcome oriented crowd because their methods and culture are so different ... and with social responsibility so sexy, lets take advantage of the 10 years we have these guys before they look around and see their peers all driving BMWs into the driveways of their 4 bedroom suburban houses and go out an make a couple million before they have to retire (OK, that was a little cynical).

If this was my only board, I would invest the energy. If I was on more than one, I wouldn't have the energy required and would hope other board members stepped up. An alternative might be to recruit a few additional quality people to the board since the idea is good, but the organization clearly can't be a personality driven creature.

So basically, were I on the board, appropriate sanctions and controls would be put in place and an opportunity to reform offered as long as the whole board stepped up and devoted the hours it was going to take, but that is just me.

PS Know that among the vitriol you have folks out here that are about as supportive as it gets. Keep up the good work :)

8 comments:

"So basically, were I on the board, appropriate sanctions and controls would be put in place and an opportunity to reform offered as long as the whole board stepped up and devoted the hours it was going to take, but that is just me."

This doesn't read like much more than PR doublespeak to me. What are "appropriate sanctions"? Canning the guys? Suspending them? Demoting them? A severe tongue lashing? A severe regular lashing? What in the world are you actually talking about?

What about controls? What does that mean? You're talking so generally here that you aren't really saying anything at all.

That said, I have to give Lucy a ton of credit for what seems to be a sincere attempt to evaluate some genuine solutions to what is a very real problem for GiveWell. Please understand, I'm not trying to say you don't know what you're talking about, but I would like to know what you really would do in this situation.

Too often in the nonprofit sector, IMHO, we discount the high driven, high-performance, outcome oriented crowd because their methods and culture are so different

Why not look for and lend support to the people already in the field, with expertise, who are 'high driven, high performance, and outcome-oriented?' There are plenty of them. What about using a $300K bankroll to grubstake a few of them, rather than asking another field entirely to ride in on a white horse?

First, I can only be thankful I am not in the same situation because then I would have to make specific, documented decisions.

Second, I have no first hand knowledge of the situation and I just gave you five variables that would impact the details of what I would do.

But since that type of answer generally isn't acceptable in Internet land, nor, generally, offering any sense of shades of grey, I'll try to give you a bit more satisfying of a response.

If there was sufficient money in the bank and this is a second instance of sanction-able behavior (dishonesty, for example), I would demote the responsible parties and recruit a new executive director.

If this is the first sanction-able offense I would demote the responsible parties and not recruit new leadership (giving folks a chance at redemption)

If there was not sufficient money in the bank and the board was not willing to take responsibility for fundraising, I would provide a severe tounge lashing plus. The problem with the plus is now you need to bring in lawyers... can you reduce salary? I don't know.

HOWEVER, the punishment is SO not the issue. The training of the staff, the development of the board and the everything that happens over the next 12 to 24 months is the much harder decision Lucy has to make.

I love that the Metafilter folks are talking charities. On one hand I think lay people need to learn the complexities of the real world of charity. On the other hand, we in the charity sector need to understand the the complexity is sometimes used by us as an excuse or reason that we can't do something that makes perfect sense.

I would challenge some of your assumptions:

(1) The idea there are others in the field (much less high performers) that will take on a role like leading GiveWell is flawed, IMHO. The funding base is not there for this organization to recruit "regular" people. Your only options are folks willing to risk not getting a paycheck.

Those that can bring funding with them are already "captured" by a system based on relationships rather than transparency and metrics.

(2) That there is $300K somewhere to grubstake an existing high performer... not so much. Lots of money, but it tends to be available on the who you know basis rather than the what you know or how you perform basis.

david geilhufe said... "The quality of the idea is extraordinary, IMHO. No one has done openness and transparency well or modeled it for others. You guys are doing a great job."

GiveWell has been a model for transparency? Really? Can you explain how? Their methodology is undocumented. Their board meeting minutes do not reflect the proceedings. Their marketing has been deceptive and destructive. In what way is that a "great job"?

Maybe, you meant that $66K for running an organization like GiveWell is a great job, if you can get it. With that, I agree.

(1) They publish an audio recording of their board minutes. Find me another giving organization that does that.

(2) They publish the materials charities send them. Show me another giving organization that publishes applications and supporting docs submitted.

(3) They publish their unfiltered, raw evaluations. Again, show me a grant making org that does this.

(4) They encourage and facilitate public discourse about metrics, measurement, charity evaluation and their own organization.

Not sure why you say their methodology is undocumented-- what are you expecting to be able to see? I can see their methodology right on their website by reading their analysis of specific organizations. It needs to be refined and professionalized, but it seems to be there.

As for the idea being quite ordinary. You are absolutely right! The amazing thing is that in the charity sector, the ideas are actually is quite extraordinary.

As chair of one board and advisor to another, with experience dealing with for-profit and not-for-profit boards, I think publishing (hours long) audio recordings of meetings in no replacement for accurate and timely written meeting minutes. I can review written meeting minutes in minutes, the audio takes hours.

Are you aware GiveWell's board membership was changed without mention in the meeting minutes? Does this not seem a noteworthy event?

For many boards, the deliberations are sensitive but the decisions public. That is what accurate meeting minutes achieve.

Also, can you elaborate on the extraordinary idea being presented by GiveWell. Using metrics beyond overhead costs to measure non-profit organizations is an idea I've dealt with firsthand for the last 7 years.

Take public schools, as an example (a GiveWell target). Do you have any idea how much state and federal data reporting is required by the BoE and DoE. There is plenty of room for improvement, but it is untrue to say well-funded organizations are not being reviewed on multiple criteria. GiveWell's basic claim is that they are better able to conduct such review.

Show me the data, and I'll believe. Show me shoddy ethics and amateurish whitepapers, and I'll conclude your entire organization is a fraud.

Well it's good to hear that you at least think he ought to be demoted, finding anyone who will readily accept that he need receive anything more than a slap on the wrist has been difficult. May I suggest that the reason why "Charities, especially private foundations, IMHO exhibit some of the most sleazy shenanigans ever conceived by corporations" might be because you people in the NPO world seem to take things like this so lackadaisically and "punishment is SO not the issue".

Many people seem to regard this as ethically equivalent to Holden making a bunch of anonymous comments on the internet in his private life, rather than having decided that those measures should be taken in the name of the company and as an officer of the company.